RE:RE:RE:RE:RE:RE:RE:Trevali Mining Hits A Jackpot...with PUMASome things that I have been trying to figure out regarding this deal:
This is a letter of intent with Trevali indicating that they will proceed towards a conclusion that ultimately will see them owning 75% off MB, etc. That is clear to me but what remains unclear to me is this:
1) PUMA announced a PP of $825,000 back in December stating that these monies would be used primarily for exploration of its properties. I am assuming that those who bought in did so thinking that they were getting in on the 5000 meter drill program designed to further prove up the potential of MB. They paid .10 for that privilege and I wonder if PUMA will actually now go ahead with this or even if they can without Trevali's support and approval. What control at this very moment does Trevali have and if PUMA were to proceed what would be the impact of this be . . . would it just cause an increase in Trevali's stock price given their future ownership split. How much could PUMA expect their stock to increase if results were good? At this time if a drill program was to proceed would PUMA only have to fund at 25% of the original cost estimate? If they would have to fund 100% then why would they do this? WOuld it make more sense for them to put their drills down and to wait it out until the LOI becomes executed/fulfilled and title transfers take place. If this is the case . . . given monies are owed towards the end of this year for the environmental review do things slow down until then?
2) PUMA has 200 million outstanding shares . . . or so . . . Does it make sense given PUMA will need to raise monies to continue going forward for it to propose a 5-1 or 10-1 stock consolidation? PUMA announced that it had increased the right to grant stock options to its executives from 10 million to over 20 million shares. Was this done to ensure leadership, following a consolidation, could then grant themselves options to make up for the impact of a consolidation on themselves? Consolidations typically begin their first day of trading at a ratio increase X times the amount of the float decrease and then for most firms go down in value. Perhaps this would not happen in PUMA's case give how far along things are with MB but could anyone guarantee this?
Lets say that the leadership team holds 20 million of the 200 million shares. After a 10-1 consolidation that number will change to 2 million, on day one of resuming trading share price would say go from .08 to .80 (and so paper value would remain equal). But, if it follows what typically happens in most of these cases the price would then start to go down, news most likely would come out of a PP, dilution would occur, and we would find ourselves say at .60 with now 30 million outstanding shares, of course some money in the bank, and then would learn that leadership had granted themselves some options, typically done to allow them to recover the value lost when consolidation had taken place. (outsider overal share value would decrease but not necessarily insider)
Now this is just speculation on my part and perhaps the plan is go forward with a 200 million float but when I review December news, name and stock option change in January, and then the nature of this deal with Trevali what I thought was most likely to not likely happen takes on greater weight, especially given the unknowns on how PUMA will proceed and how it can proceed given this deal with Trevali.
Would a consolidation be bad? Most times they are but given the potential of MB perhaps the losses associated with a consolidation (what normally happens to existing non-insider shareholders) would counter where this stock could go with 200 million+ outstanding shares and a deal that left it with only 25% of the original asset it sought to get control over.
So given those question this is why this worries me, and perhaps this is what Nighthawk has also been thinkiing about, this deal with Trevali had really thrown the board out of whack. Since I still hold a lot of this but did reduce by 50% on the release of this news - right now that is looking like a good decision - it still remains in my best interests to see this go up. Had I followed my head more closely I would have sold all I own and then sat back to see when it made sense to reload.
PUMA needs now to come out and to share what their plans are for moving forward under this news arrangement, when they can, and how much it will cost them to do so. To me it makes little sense for them to spend 100% of their money to realize 25% of the potential value great news would generate. Better to wait and to fund their portion at 25%.
On the upside Serendipidy suggested to me a week or so ago that I buy some pot stock. Now being a little older I had reservations about this but thought given PUMA's news I might need to actually smoke some pot to level out. Having given it up when I turned 18 and could then legally drink many, many, many moons have passed and upon reflection I thought, no I am not likely to get back into being a stoner but perhaps I could be a stoner supporter and put my money into legit companies prepping up to offer such products. Looks like pot stocks are turning the corner and so for at least now I smile once more and feel a little hunger for more :)
Lastly, 068 - Leede's - did a whack of buying on March 2nd / 5th (thank you) and I am not sure they would have done that had they thought a consolidation was in the works. Generally I have noticed when such things are in the works the price floats down and while PUMA is down it has not been dramatic so perhaps what I am wondering / worrying about has little chance of happening. That being said it is never a bad idea to reach out to the firm involved and to try and check this out. I have tried to check in with PUMA every quarter or so for an update although since early December I have being sitting back watching and assuming all was heading to a conclusion many of us thought would see an interesting uptick in the stocks price. Puma normally has a meeting in August and if a consolidation was in the works it would have to be voted on then so plenty of time to see if this might be in play and also to reflect on how bad this might actually be if it was to take place.